Investors could be facing losses of up to £60m following the liquidation of a specialist property investment firm.
A liquidator has been appointed to property management firm Arck LLP following an application by investors to freeze the firm’s assets last December. Two individuals were arrested and bailed earlier this month following allegations of fraud related to the firm.
Arck operated a scheme where funds obtained through IFAs, property agents and accountants were used to facilitate foreign property developments. Many investors used their pension savings to invest in the scheme through Sipp firm HD Sipp.
The initial complaint against Arck which triggered the court action involves 135 people with investments totalling £4.16m in the company’s Arck Estrella and Paradise Beach property developments. The complaint was lodged after Arck failed to repay the funds to investors on time.
Arck director Kathryn Clark is also listed as an administrator at HD Sipp. Richard Clay, another Arck director, was previously a director at Nottingham Rugby Club. Court documents obtained by Money Marketing show Arck bought HD Sipp’s offices in Nottingham for £900,000 in 2006.
HD Sipp could not be reached for comment.
A Nottinghamshire Police spokesman says: “Nottinghamshire Police can confirm it is investigating allegations of fraud related to the activities of Arck LLP. Two people, a 47-year-old man and a 49-year-old woman, were arrested in connection with this inquiry in Nottinghamshire on March 2. They have been interviewed by detectives and bailed pending further enquiries.”
The FSA varied HD Sipp’s permissions on March 2 preventing the firm from accepting new regulated business.
Court documents relating to Arck’s liquidation refer to bank statements which suggested the Arck trust account had a balance of just £25.90 as at September 30, 2011.
The court documents also state that Clay provided a bank statement containing inaccurate information to an investor prior to the freezing order being obtained.
Regulatory Legal is acting on behalf of 106 Arck investors and their IFAs. Director Gareth Fatchett says the initial £4.16m complaint is the “tip of the iceberg”, with an estimated 1,000 investors affected, with assets totalling £60m.
He says: “The bulk of investments went via regulated companies which inevitably will lead to a significant call on the Financial Services Compensation Scheme if these firms go bust. Our action has uncovered evidence which we felt compelled to refer to the police.”
Money Marketing understands the arrests follow a joint investigation by the FSA and the Serious Fraud Office.
The FSA and the SFO declined to comment.